Uniswap's UNI Surges Following Fee Reward Mechanism

Uniswap's UNI Surges Following Fee Reward Mechanism

By: Isha Das

The native token of decentralized exchange (DEX) Uniswap, UNI, surged 60% to a two-year high following a proposal to overhaul the DEX's governance system. The new upgrade is geared towards improving governance participation and economic incentives for UNI token holders.

Less than 10% of UNI tokens, which form the backbone of the voting system, are actively being used resulting in low engagement and 'stale' delegation. The new proposal aims to incentivize active participation in the community by offering holders a share of the protocol’s fee revenue when they stake and delegate their UNI tokens.

Once the proposal is refined through discussion and consensus in the Uniswap forum, the community will hold two votes: a snapshot vote on March 1 and an on-chain vote on March 8. Post that a crucial decision to activate the fee mechanism will be proposed for separate voting.

The proposal could serve as a benchmark for other decentralized protocols wanting to endorse feasible participation and responsible governance practices. However, a careful appraisal is required to comprehend the potential impacts on liquidity and trade execution.

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